Advantages of Social E-Commerce

Social Ecommerce is a subset of Ecommerce that involves the use of social media platforms like Facebook, Twitter, Instagram, Pinterest or Snapchat. Social media is increasingly being used by organizations to target their customer segments. Social media platforms have widely collaborated with leading organizations in order to target customers through these platforms. This strategic collaboration allows businesses to reach out to a large audience in an effective manner (Tuten & Solomon, 2017). This report throws light upon various advantages and disadvantages of social ecommerce.

Social Ecommerce term was first coined by Yahoo in 2005. Since then, the utility and effectiveness of the process has improved over time. The changing lifestyles and increasing use of social media depicts a bright future for social ecommerce.

Since its inception, social ecommerce has largely benefitted industries by enhancing sales through effective customer targeting. There are various advantages of social ecommerce that have made one of the most important source of sales for the firms. Few advantages of social ecommerce are as below: 

Large audience

It is uncommon to find someone who does not has a Facebook or an Instagram account. Social media has enveloped people across all age groups, income classes, religions and geographical areas (Hollensen & Raman, 2014). Social media has enabled people from different cultural backgrounds to garner the same information in their local languages. Therefore the largest advantage of social ecommerce lies with the large amount of population that can be targeted through social media. 2017 saw a total of 3.1 billion users. This number is estimated to reach 5.24 billion by 2021 (Statista, 2017). The picture below depicts that social media penetration is about 42% while penetration of unique mobile phone users within the total population is 68%. Active mobile social users form 39% of the total population. Such large number of social media users make it easier for organizations to target millions of customers through a single platform. Social ecommerce allows organizations to target similar customers through different social media platforms.

Increased frequency 

Social Ecommerce and adverts can be used to target customers of the organization with an increased frequency. A single customer can see the same ad on Facebook, Instagram and even Twitter every time the individual logs into their account. Given the increasing amount of time people spend on their social media profiles, it is imperative that social ecommerce can enable organizations to target their potential customers many times during the day. Increased frequency of targeting will eventually help the firm in communicating with potential customers in an effective manner (Chaffey, 2016). As opposed to traditional marketing channels like newspaper and television ads, Facebook and Instagram ads can reach out to customers various times in a day. When adverts of a particular product are frequently viewed by potential customers then the possibility of the customer buying the product increases, leading to increased sales for the organization. This is why a major advantage of social ecommerce is the increased frequency with which organizations can target customers. 

Large audience

Two way communication

Most of the traditional marketing strategies allow organizations to communicate their message to their potential customers but social media marketing and social ecommerce allows a two way communication between the organization and its stakeholders. Customers who have availed services or bought products from a particular brand via social media, they have the power to provide feedback to the organization. This has been possible owing to the increasing presence of organizations on various social media platforms. If a customer compliments a brand then it leads to building a positive goodwill of the brand. On the other hand, one negative feedback from the customer would be visible to everyone. This makes it imperative for brands to revert to customers’ feedback and address their grievances in an effective manner. This establishes a two way communication between the brand and the customer (Lee et. al., 2016). Such a communication creates trust and transparency between the customers and the organization leading to improved goodwill.

Effective targeting

Social Ecommerce assists organizations in effectively targeting their customers. A target customer of a particular organization is the group of customers whose needs the business aims to fulfill (Kotler, 2015). It is essential for organizations to identify their target market in an efficient manner so that the business goals can be aligned with consumer needs and wants. Social Ecommerce has enabled organizations to target customers efficiently. While showing advertisements to customers, social ecommerce platforms can filter which set of customers will view the advertisements. These customers are segmented on the basis of their geographical location, age group, income group, last searched history or even cultural backgrounds. Effective targeting ensures efficient utilization of organization’s marketing resources and leads to improved sales by the organization. 

Social Listening

Social listening is the ability of a firm to listen to all the details that are being discussed about the firm across all social media platforms. Social listening is important for organizations in order for them to understand consumer’s opinions about the brand. This allows them to address customer issues, be grateful for positive feedback and resolve customer queries as and when they occur. Social listening also allows organizations to gain a speculative idea about the organization’s goodwill in the market.

There are various disadvantages that are faced by organizations as well as customers due to social ecommerce. A few disadvantages are as below:

Too frequent advertisements

Often customer complain that they end up seeing the same advertisments too frequently across various social media platforms. Social Ecommerce allows organizations to target the same set of customers again and again. This may irritate customers and hence they may refrain from buying that product all together. Social Ecommerce today has the ability to track a customer’s interests, recent searches, geographical locations and social media profiles. This provides organizations immense amount of information about the customers and hence they are able to consistently target the customers who may have shown a little interest in the product. This often leads to increased efforts by organizations to reach out to customers via various social channels. This excessively frequent advertising may make customers lose interest in the product.

Increased frequency

If a customer has bought the product through any offline channel, for a few days at least, there is no way for social platforms and organizations to know if the customer has bought the product and hence they will continue to target the same customer and those ads will be entirely useless for the customer.

Customers have also often complained that social ecommerce and its advertisments act as a disruption as individuals use social media platforms as a form of entertainment. Targeting customers through these platforms then becomes ineffective.

Expensive

Social Ecommerce is often more expensive than traditional forms of reaching out to customers. Social Ecommerce platforms have a much lesser click through rate and hence it is difficult for organizations to generate a high number of sales by solely targeting them through social ecommerce. This is therefore considered to be an expensive strategy adopted by organizations. For example Amazon will incur a cost in displaying an advertisement to customers but the probability of customer clicking upon the advertisments and buying something off amazon is much lesser. This entire process makes social ecommerce an expensive commerce strategy. 

Transparent 

Social Ecommerce create a dangerous kind of transparency. This transparency is often good when it customers post positive reviews and the public at large can see these reviews. On the other hand, if a customer posts a negative review then the transparency of that review adversely impacts the goodwill of the organization. Therefore social ecommerce is an extremely transparent medium and this makes it imperative for organizations to be extremely cautious with their product or service delivery. Customer satisfaction needs to be paid immense attention in order to maintain a positive social image. This is unlike traditional modes of commerce as customer reviews stay private.

Ecommerce has come a long way since its inception. Most businesses have benefitted tremendously with the help of using ecommerce platforms to sell and promote their products and services. The increasing globalization and advent of technology has also supported the industry in an extensive manner.

Social commerce is simply a subset of Ecommerce. The extensive use of social media across different people belonging to varied age groups, income sectors, geographical and demographical segments has clearly established that social media is here to stay. Initially, social media was used as a source of entertainment and communication. Over a period of time, social media is being increasingly used for Ecommerce. Customers are targeted effectively through social ecommerce.

In the future, the contribution of social ecommerce within every business would enhance drastically. Organizations would introduce unique and innovative strategies to promote their products and services. Moreover, newer platforms of social media would also be introduced. Besides Facebook and Twitter, the use of Instagram and Snapchat is also increasing by organizations as a channel of social ecommerce. Over a period of time, new platforms would be launched.

Internet would also spread to developing and under developed countries of the world. There is a large population of the world which does not has access to internet. Growth of internet in these areas would also result in increased reach of social ecommerce. This increased reach would also lead to increased competition which would be beneficial for customers at large.

Conclusion

Social Ecommerce has gained traction over the last few years. Social Ecommerce allows organizations to target customers basing upon their geographic, demographic and psychographic segments that they belong in. Social Ecommerce has also enhanced the overall reach of customers (Spencer et. al., 2014). This increases organizational productivity and allows businesses to reach out to customers through varied channels. Social Ecommerce is here to stay and has largely enabled customized targeting of customers leading to increased sales productivity and hence enhanced revenue generated by the business. 

References

Chaffey, D. (2016). Global social media research summary 2016. Smart Insights: Social Media Marketing.

Hollensen, S., & Raman, A. (2014). Social Media Marketing. Marketing Canada-Journal.

Kotler, P. (2015). Framework for marketing management. Pearson Education India.

Lee, Y. K., Kim, S. Y., Chung, N., Ahn, K., & Lee, J. W. (2016). When social media met commerce: a model of perceived customer value in group-buying. Journal of Services Marketing, 30(4), 398-410.

Spencer, S., Harding, J., & Sheahan, J. (2014). Social eCommerce: Increasing Sales and Extending Brand Reach. ” O’Reilly Media, Inc.”.

Statista, (2017), ‘Number of worldwide social network users’, Available at https://www.statista.com/statistics/278414/number-of-worldwide-social-network-users/, Retrieved on 22 April, 2018.

Tuten, T. L., & Solomon, M. R. (2017). Social media marketing. Sage. United Kingdom.